Some investors rely on dividends to grow their wealth. If you’re one of those dividend experts, you might be intrigued to learn that Richards Packaging Income Fund (TSE:RPI.UN) is about to lose its dividend in just three days. I don’t know. . The ex-dividend date is one day before the record date. The record date is the date on which a shareholder must appear on the company’s books in order to receive the dividend. The ex-dividend date is an important date to be aware of, as purchasing stocks after this date may result in delayed settlements that will not show up on the record date. This means you must purchase Richards Packaging Income Fund shares by October 31st to receive the dividend, which will be paid on November 14th.
The company’s next dividend payment will be C$0.11 per share, following a total of C$1.32 paid to shareholders last year. Based on last year’s total dividend payments, Richards Packaging Income Fund has a yield of 5.4% on the current share price of CA$31.24. Dividends are an important source of income for many shareholders, but the health of the business is critical to maintaining dividends. We need to see if the dividend is covered by profit and if it’s growing.
Check out our latest analysis for Richards Packaging Income Fund.
If a company pays out more in dividends than it earned, then the dividend might become unsustainable – hardly an ideal situation. Richards Packaging Income Fund paid out 56% of its income to investors last year, which is a normal payout level for most companies. However, cash flow is usually more important than profit for assessing dividend sustainability, so we should always check if a company generated enough cash to pay its dividend. The good news is that the company paid out just 21% of its free cash flow last year.
It’s reassuring to see that the dividend is covered by both profit and cash flow. This generally suggests the dividend is sustainable, as long as earnings don’t drop precipitously.
Click here to see how much profit Richards Packaging Income Fund paid out over the last 12 months.
historic dividend
Companies with promising growth potential are usually the ones that pay the most dividends, since it’s easier to grow dividends when earnings per share are improving. If business performance is poor and dividends are reduced, corporate value may fall sharply. With that in mind, we’re encouraged by the steady growth of the Richards Packaging Income Fund, which has increased its earnings per share by an average of 9.7% over the past five years. Although earnings have been growing at a reliable rate, the company is distributing a large portion of its earnings to shareholders. If management raises the payout ratio further, we would view this as an implicit signal that the company’s growth prospects are slowing.
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Another important way to measure a company’s dividend prospects is by measuring its historical dividend growth rate. Over the past 10 years, the Richards Packaging Income Fund has increased its dividend at an average annual rate of approximately 7.9%. It’s encouraging to see the company raising its dividend amid growing profits, suggesting that the company has at least some interest in rewarding shareholders.
Has Richards Packaging Income Fund gotten what it needs to maintain its dividend payments?Although earnings per share growth has been slow, Richards Packaging Income Fund’s dividends have It’s an average level. Barring sudden changes in earnings, we think the dividend is likely to be somewhat sustainable. Pleasingly, the company paid out a low percentage of free cash flow, to say the least. Overall, it’s hard to get excited about Richards Packaging Income Fund from a dividend perspective.
Would you like to know more about Richards Packaging Income Fund? This is a visualization of its historical revenue and profit growth.
If you’re interested in the market for high dividends, we recommend checking out our pick of the best dividend stocks.
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This article by Simply Wall St is general in nature. We provide commentary using only unbiased methodologies, based on historical data and analyst forecasts, and articles are not intended to be financial advice. This is not a recommendation to buy or sell any stock, and does not take into account your objectives or financial situation. We aim to provide long-term, focused analysis based on fundamental data. Note that our analysis may not factor in the latest announcements or qualitative material from price-sensitive companies. Simply Wall St has no position in any stocks mentioned.
